In this article, we will take a look at the list of homebuilder stocks sorted by hedge fund sentiment. To see more such companies, go directly to 5 Best Homebuilder Stocks Sorted By Hedge Fund Sentiment.
Increasing mortgage rates and the global macro uncertainty are hammering the US housing market. Fitch recently said in a report that the mortgage rate volatility is expected to worsen the slowdown in the US housing market in 2023. The firm revised its projections for the US housing industry to reflect this downturn. Fitch now expects US housing starts to drop 20% this year, compared to its previous forecast of an 11.9% decline.
While housing starts jumped 9.8% in February this year, a surprise, Fitch expects the mortgage rate increases recorded after February will affect the industry during the rest of the year.
Fitch also said that homebuilders are expected to report median sales declines of 16%-18% for 2023. These declines will be driven by a slowdown in home deliveries and low home prices.
Fitch expects most homebuilding companies to see EBITDA margins decline of as much as 800 basis points “as lower operating leverage and higher incentives are only partially offset by lower costs for certain building products like lumber.”
The sales jump in the housing market experienced earlier this year pointed out in the Fitch report was mostly due to the discounts and offers given by sellers who are spooked by a rapid decrease in demand. A report by Redfin said that in the latest market a house “that’s not perfect may stay on the market for three to four months if the seller doesn’t throw in something to sweeten the deal.”
However, on a long-term basis, the US housing and homebuilding market remains promising. There is a shortage of houses in the US, driven by a slowdown in construction activity by homebuilders who remain cautious due to the current environment. Another factor causing the inventory crunch is the fact that most people refuse to put their house on the market in the current environment where offered prices are low. A report by Bloomberg said that to keep the new-home pipeline on par with 2019 levels, homebuilders will need to increase housing starts by around 20%.
Data also suggests that the slowdown in the market might be temporary and home prices will rebound sharply. A Bloomberg report earlier this month quoted a survey from Pulsenomics, which indicates that home prices in the US will begin to see a rebound in 2024 and will continue to increase through 2027. The survey included 107 respondents. According to the results, home prices are expected to fall 2% nationally this year. They will gain about 1.2% in 2024. The real rebound will begin after that, with prices expected to increase 4% annually through 2027.
The Bloomberg report quoted Terry Loebs, founder of Pulsenomics, who said:
“The dispersion of expectations among our survey panelists remains elevated: the five-year forecasts of the optimistic quartile of experts imply that aggregate US home values will grow to $60.9 trillion by the end of 2027.”
Photo by Jens Behrmann on Unsplash
Methodology
We scanned Insider Monkey’s database of 943 hedge funds and picked all notable homebuilders in which these hedge funds have stakes in. The list is ranked in ascending order of the number of hedge fund investors.
List of Homebuilder Stocks Sorted By Hedge Fund Sentiment
26. AMREP Corporation (NYSE:AXR)
Number of Hedge Fund Holders: 1
AMREP Corporation (NYSE:AXR) is involved in the real estate and homebuilding industry via its subsidiary AMREP Southwest Inc.
25. Stratus Properties Inc. (NASDAQ:STRS)
Number of Hedge Fund Holders: 4
Texas-based residential properties company Stratus Properties Inc. (NASDAQ:STRS) in February this year said it began construction of Holden Hills, a new development comprised of 475 custom residences on 495 acres within the established Barton Creek community in southwest Austin. Stratus Properties Inc. (NASDAQ:STRS) is up about 10% year to date through April 24.
24. IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS)
Number of Hedge Fund Holders: 6
IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS) is an Argentinian real estate company that is also involved in the construction of houses. 6 hedge funds tracked by Insider Monkey had stakes in IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS) as of the end of the fourth quarter of 2022.
23. Dream Finders Homes, Inc. (NASDAQ:DFH)
Number of Hedge Fund Holders: 7
Florida-based homebuilding company Dream Finders Homes, Inc. (NASDAQ:DFH) ranks 23rd in our list of the top homebuilding stocks sorted by hedge fund sentiment. The biggest hedge fund stakeholder of Dream Finders Homes, Inc. (NASDAQ:DFH) as of the end of the fourth quarter of 2022 was Ken Griffin’s Citadel Investment Group which owns a $1 million stake in the company. Overall, 7 hedge funds tracked by Insider Monkey have stakes in Dream Finders Homes, Inc. (NASDAQ:DFH).
22. Legacy Housing Corporation (NASDAQ:LEGH)
Number of Hedge Fund Holders: 9
Legacy Housing Corporation (NASDAQ:LEGH) specializes in mobile homes, which include tiny homes and modular homes. As of the end of the fourth quarter of 2022, 9 hedge funds tracked by Insider Monkey have stakes in Legacy Housing Corporation (NASDAQ:LEGH). The biggest hedge fund stakeholder of Legacy Housing Corporation (NASDAQ:LEGH) includes Travis Cocke’s Voss Capital which owns a $5.6 million stake in the company.
21. The St. Joe Company (NYSE:JOE)
Number of Hedge Fund Holders: 15
Insider Monkey’s database of 943 hedge funds shows that 15 hedge funds had stakes in The St. Joe Company (NYSE:JOE) as of the end of the fourth quarter of 2022. The biggest hedge fund stakeholder of The St. Joe Company (NYSE:JOE) was Fairholme (FAIRX) of Bruce Berkowitz.
20. Hovnanian Enterprises, Inc. (NYSE:HOV)
Number of Hedge Fund Holders: 15
In February, Hovnanian Enterprises, Inc. (NYSE:HOV) gave guidance for the second quarter of fiscal 2023. Hovnanian Enterprises, Inc. (NYSE:HOV) expects its total revenues to come between $525 million and $625 million.
15 hedge funds have stakes in Hovnanian Enterprises, Inc. (NYSE:HOV). The biggest stakeholder is DG Capital Management of Dov Gertzulin.
19. Century Communities, Inc. (NYSE:CCS)
Number of Hedge Fund Holders: 16
Colorado-based Century Communities, Inc. (NYSE:CCS) is a notable name in the list of homebuilders sorted by hedge fund sentiment. Century Communities, Inc. (NYSE:CCS) has gained about 28% year to date. In February, Century Communities, Inc. (NYSE:CCS) increased its quarterly dividend by 15%. Among the biggest hedge fund stakeholders of Century Communities, Inc. (NYSE:CCS) include Dmitry Balyasny’s Balyasny Asset Management which has a $28.1 million stake in the company.
Heartland Small Cap Value Strategy made the following comment about Century Communities, Inc. (NYSE:CCS) in its Q4 2022 investor letter:
“Century Communities, Inc. (NYSE:CCS), a homebuilder based in Denver, Colorado, hasn’t been immune. Sell-side analysts now believe CCSs’ 2023 sales will fall to 2020 levels, which is 33% below what they expected at the start of 2022. The stock is down around 38% year to date. We believe this is an example of short-term fear providing an excellent opportunity for the patient long-term investor. CCS is trading at just 78% of book value, thus providing a margin of safety.
Meanwhile, we are constructive on the supply-demand prospects for CCS’s core product. Approximately 80% of CCS’s sales are made to entry-level buyers. Supply of starter homes is tight after nearly a decade of below-average building activity. At the same time, millennials are reaching their first-time homebuyer age and forming households, providing a long-term buoy for demand.
Century’s management team has guided the company to more than 20 straight years of profitability. We think they should be able to successfully navigate a housing slowdown and close its discount to book value over time.”
18. Green Brick Partners, Inc. (NASDAQ:GRBK)
Number of Hedge Fund Holders: 17
Texas-based Green Brick Partners, Inc. (NASDAQ:GRBK) is having a great time in 2023, having gained about 80% in the year through April 24. In February Green Brick Partners, Inc. (NASDAQ:GRBK) posted Q4 results. GAAP EPS in the quarter came in at $1.18, beating estimates by $0.04. Revenue in the quarter fell 4.7% year over year to $431.09 million, beating estimates by $71.69 million.
17. Patrick Industries, Inc. (NASDAQ:PATK)
Number of Hedge Fund Holders: 17
Patrick Industries, Inc. (NASDAQ:PATK) provides homebuilding material and also deliver manufacturer housing solutions. As of the end of the fourth quarter of 2022, 17 hedge funds had stakes in Patrick Industries, Inc. (NASDAQ:PATK).
16. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 19
Brookfield Renewable Partners L.P. (NYSE:BEP) is a notable homebuilding company in North America. It is owned by Brookfield Corporation, which is a quite popular stock among elite hedge funds.
15. LGI Homes, Inc. (NASDAQ:LGIH)
Number of Hedge Fund Holders: 19
Shares of the Texas-based homebuilder LGI Homes, Inc. (NASDAQ:LGIH) have gained about 20% year to date through April 24. As of the end of the last quarter of 2022, 19 hedge funds tracked by Insider Monkey were bullish on LGI Homes, Inc. (NASDAQ:LGIH). The biggest stakeholder of LGI Homes, Inc. (NASDAQ:LGIH) during this period was Kerr Neilson’s Platinum Asset Management which owns a $28 million stake in the company.
Moon Capital made the following comment about LGI Homes, Inc. (NASDAQ:LGIH) in its Q4 2022 investor letter:
“For portfolio management reasons, we sold our stake in LGI Homes, Inc. (NASDAQ:LGIH) during the fourth quarter (at a loss.) When we initially purchased LGI Homes in March 2022, the housing market was in the late stages of one of the most robust demand environments that we have seen in more than a decade. Although builders were very clearly overearning – and impending increases in mortgage rates would throttle growth and margins – we determined that the longer-term secular growth story would temper any short-term demand declines.
Since the housing collapse of 2008, there have been roughly 12 million new households formed in the U.S., compared to only 8 million newly built single-family homes. Irrespective of higher mortgage rates, there is still an undeniable shortage of housing inventory. On average, there are roughly 2.4 million homes for sale at any given time, a million units more than the current level of approximately 1.4 million houses.
Housing prices have increased about 50% since the beginning of 2019. This, combined with a 3.2 percentage point increase in mortgage rates, has resulted in an average 80% increase in house payment for the same home compared to four years ago…” (Click here to read the full text)
14. Beazer Homes USA, Inc. (NYSE:BZH)
Number of Hedge Fund Holders: 20
Atlanta, Georgia-based home construction company Beazer Homes USA, Inc. (NYSE:BZH) ranks 14th in our list of the biggest homebuilding companies sorted by hedge fund sentiment. As of the end of the fourth quarter of 2022, 20 hedge funds tracked by Insider Monkey were bullish on Beazer Homes USA, Inc. (NYSE:BZH). Jean-Francois Tardif’s Timelo Investment Management owns a $54 million stake in Beazer Homes USA, Inc. (NYSE:BZH).
13. M.D.C. Holdings, Inc. (NYSE:MDC)
Number of Hedge Fund Holders: 21
Home construction company M.D.C. Holdings, Inc. (NYSE:MDC) shares have gained about 22% year to date through April 24. It’s a high-yield dividend stock, with an over 5% dividend yield as of April 24. The biggest hedge fund stakeholder of M.D.C. Holdings, Inc. (NYSE:MDC) as of the end of the fourth quarter of 2022 was Ken Griffin’s Citadel Investment Group which owns a $9.9 million stake in the company.
12. Taylor Morrison Home Corporation (NYSE:TMHC)
Number of Hedge Fund Holders: 22
Taylor Morrison Home Corporation (NYSE:TMHC) is a notable name in the list of homebuilder stocks sorted by hedge fund sentiment. As of the end of the fourth quarter, 22 hedge funds tracked by Insider Monkey had stakes in Taylor Morrison Home Corporation (NYSE:TMHC). The biggest hedge fund stakeholder of Taylor Morrison Home Corporation (NYSE:TMHC) is Bill Miller’s Miller Value Partners which had an over $65 million stake in the company.
11. M/I Homes, Inc. (NYSE:MHO)
Number of Hedge Fund Holders: 24
As of the end of the fourth quarter of 2022, 24 hedge funds tracked by Insider Monkey held stakes in M/I Homes, Inc. (NYSE:MHO). The biggest stakeholder of M/I Homes, Inc. (NYSE:MHO) is Dmitry Balyasny’s Balyasny Asset Management which owns a $24 million stake in the company. In February, M/I Homes, Inc. (NYSE:MHO) posted Q4 results. GAAP EPS in the quarter came in at $4.65, beating estimates by $0.49. Revenue in the period jumped about 15.7% year over year to reach $1.2 billion, beating estimates by $170 million.
Miller Value Deep Value Strategy made the following comment about M/I Homes, Inc. (NYSE:MHO) in its Q1 2023 investor letter:
“During the quarter, our largest positive contributor was M/I Homes, Inc. (NYSE:MHO), with share prices up in excess of 30%. Homebuilders in general had been under pressure for much of last year due to marketplace concerns on the potential impact from higher mortgage rates and lower housing affordability. However, as mortgage rates pull back the positive demographics and lack of housing supply over the past 10 years provides a very favorable long-term supply/demand picture for the industry that should shorten the current downturn. M/I Homes is nicely diversified covering multiple home-type categories, with properties in valuable local communities in the Midwest and Southeast (#2 in the Jon Burns Real Estate Consulting Submarket Desirability Index). M/I Homes’ attractive asset base, strong balance sheet and ongoing valuation discount to peers should provide an attractive long-term reward/risk investment opportunity.”
10. Cavco Industries, Inc. (NASDAQ:CVCO)
Number of Hedge Fund Holders: 25
Arizona-based manufacturer homes company Cavco Industries, Inc. (NASDAQ:CVCO)’s shares have gained about 35% this year through April 24. In December last year, Wedbush gave positive comments about Cavco Industries, Inc. (NASDAQ:CVCO), in addition to three other homebuilders, as the firm said it was assuming a favorable rate environment in 2023 that should support affordable builders.
9. Skyline Champion Corporation (NYSE:SKY)
Number of Hedge Fund Holders: 26
Skyline Champion Corporation (NYSE:SKY) ranks 9th in our list of the top homebuilding companies in America that are popular among elite hedge funds. Skyline Champion Corporation (NYSE:SKY) is up about 40% this year through April 24. In February Skyline Champion Corporation (NYSE:SKY) posted fiscal third quarter results. EPS in the period came in at $1.44, beating estimates at $0.51.
A total of 26 hedge funds tracked by Insider Monkey had stakes in Skyline Champion Corporation (NYSE:SKY) at the end of the fourth quarter of 2022.
8. Meritage Homes Corporation (NYSE:MTH)
Number of Hedge Fund Holders: 26
Meritage Homes Corporation (NYSE:MTH) earlier this year started paying dividends. Meritage Homes Corporation (NYSE:MTH) announced a quarterly dividend of $0.27 per share, which was payable on March 31.
As of the end of the fourth quarter of 2022, 26 hedge funds had stakes in Meritage Homes Corporation (NYSE:MTH). The biggest hedge fund stakeholder of Meritage Homes Corporation (NYSE:MTH) was Edgar Wachenheim’s Greenhaven Associates with a $76 million stake in the company.
7. Tri Pointe Homes, Inc. (NYSE:TPH)
Number of Hedge Fund Holders: 28
Nevada-based Tri Pointe Homes, Inc. (NYSE:TPH) is one of the best homebuilding stocks to buy according to hedge funds.
During the fourth quarter Tri Pointe Homes, Inc. (NYSE:TPH)’s GAAP EPS came in at $1.98, beating estimates by $0.43. Revenue in the quarter increased by about 24% year over year to reach $1.5 billion, beating estimates by $240 million. For the first quarter of 2023 Tri Pointe Homes, Inc. (NYSE:TPH) expects to deliver about 750 to 850 homes, at an average sales price of $720,000 to $730,000.
6. PulteGroup, Inc. (NYSE:PHM)
Number of Hedge Fund Holders: 30
A total of 30 hedge funds tracked by Insider Monkey had stakes in PulteGroup, Inc. (NYSE:PHM). The total worth of these stakes was $947 million. The biggest stakeholder of PulteGroup, Inc. (NYSE:PHM) during this period was Natixis Global Asset Management’s Harris Associates which owns a $271 million stake in the company.
Click to continue reading and see Top 5 Homebuilder Stocks Sorted By Hedge Fund Sentiment.
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Disclosure: None. List of Homebuilder Stocks Sorted By Hedge Fund Sentiment is originally published on Insider Monkey.
